TROY, Mich., March 6, 2000 -- Kmart Corporation (NYSE: KM) today reported net income from continuing operations for 1999 of $633 million, or $1.22 diluted earnings per share for the year, compared to $518 million, or $1.01 diluted earnings per share for the prior fiscal year. Net income from continuing operations for the Fourth Quarter 1999 was $412 million, or $0.77 diluted earnings per share, compared with $353 million or $0.65 per share in 1998.

Net income, inclusive of previously reported non-recurring charges, was $403 million for 1999 compared with net income of $518 million for the prior year. Net income for 1999 included a non-recurring, non-cash charge for discontinued operations of $230 million after tax, relating to the disposition of certain Builders Square operating leases. 1998 net income included a non-recurring charge of $13 million after tax, relating to a voluntary early retirement program in the Company's distribution centers.

Excluding all non-recurring charges from both 1999 and 1998, pro forma diluted earnings per share would have been $1.23 in 1999, versus $1.03 in 1998, or a 19.4 percent increase.

Commenting on the results, Kmart Chairman, President and CEO Floyd Hall said, "Our progress continued in 1999 as we achieved our fifteenth consecutive quarter of improved earnings performance. Sales productivity reached a record-level of $233 per square foot, thanks to the support of our customers, associates and supplier partners. We completed an unprecedented $1.1 billion store conversion process that has updated 1,860 stores to the easier-to-shop Big Kmart prototype. We further enhanced our merchandise assortments and expanded our popular exclusive brands such as Thom McAn, Route 66, Sesame Street and Martha Stewart Everyday home, baby and garden products. With the introduction of BlueLight.com, which offers totally free Internet access, we also took important steps toward creating a state-of-the-art online offering of services and merchandise. In 2000, we will build on our operations and merchandising momentum while making additional investments that will further enhance the efficiency of Kmart."

Impact of Staff Accounting Bulletin No. 101
During the fourth quarter of fiscal 1999, the Company adopted changes in its method of accounting related to layaway sales. This change was made in consideration of the Securities and Exchange Commission's issuance of Staff Accounting Bulletin No. 101, "Revenue Recognition in Financial Statements" (SAB 101). As layaway sales represent a small percentage of total revenue, the accounting change has an insignificant impact on the Company's annual sales and earnings. The effect of this change is a one-time, non-cash, after-tax earnings reduction of $7 million or $0.01 per share.

1999 Results of Operations
Comparable store consolidated sales for the year increased 4.8 percent in 1999. Total consolidated sales for 1999 were $35.925 billion, up 6.6 percent from $33.674 billion in 1998. Gross margin for 1999 was 21.8% of sales, compared with 21.8% during fiscal 1998. SG&A, as a percentage of sales, was 18.2% in 1999 versus 18.5% in 1998. The impact of LIFO on pre-tax earnings in 1999 was a credit of $47 million versus a credit of $50 million in fiscal 1998.

Fourth Quarter Results of Operations
For the 13-week period ended January 26, 2000, comparable store consolidated sales were up 3.7 percent. Total consolidated sales for the fourth quarter were $11.105 billion, reflecting the impact of SAB 101, from $10.401 billion in the prior year period. Gross margin for the fourth quarter of 1999 was 22.2% of sales versus 21.9% in the prior year. SG&A, as a percentage of sales, for the fourth quarter was 15.9% in 1999 versus 16.3% in 1998. The impact of LIFO on pre-tax earnings for the quarter was a credit of $37 million versus a credit of $58 million in fiscal 1998.

1999 Common Stock Repurchase Program
Under the Company's previously-announced authorization to repurchase up to $1 billion in common stock, initiated in June 1999, Kmart acquired 17 million common shares in 1999 through open market purchases for a total of $200 million.

Kmart Corporation serves America with 2,172 Kmart retail outlets. Kmart Corporation common stock is listed on the New York, Pacific, and Chicago Stock Exchanges. More information about Kmart is available through the World Wide Web in the "About Kmart" section at www.bluelight.com.